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Managing the finances of a business is extremely important for ensuring long-term and sustained profits. Without well-managed accounts, your business can’t grow because of limitations on employee numbers, stagnant goals or in the worst case, bad credit. And none of these might be your fault.
Many businesses suffer because they aren’t paid properly by their own customers but there are some things you can do to ensure a smoother payment solution:
- Advise a debt collection agency
- Be careful with extending credit
- Invoice properly
Outsourcing to a specialized agency to collect debts owed is a tried and tested method of recovering monies while being too generous credit might be the reason you need to collect a debt in the first place. Taking care of invoices in the correct manner can help alleviate many accounts-based issues.
Legal Enforcement
The amount of money owed to business has grown significantly over the past few years and late payments have a chain reaction across everyone involved. This can cause a business to cut salaries or working hours, sell off assets, or even close altogether.
Using a third party for the collection of debts has been around for centuries. Many agencies are absolute professionals with well trained legal staff as well as “doorstep” enforcers that can recover money owed to you. You could employ someone to do this yourself but it can be costly the more debts you need to enforce whereas an agency will charge an agreed percentage of the debt recovered.
There are even industry-specific debt collectors that might specialize in your field whether it’s technology-based, the catering industry, or even the burgeoning enterprise of Cannabis Debt Collection. By using staff with specific industry knowledge the agency is more likely to come to an amicable arrangement with any debtors since they understand the needs and limitations of both parties.
Necessary Checks
As the seller of a product or service, you want to obtain the most customers possible and retain those customers for as long as possible. One method of acquiring new customers is to offer goods or services on credit and many companies still do this on a whim without the necessary checks.
Credit checks might be controversial but they can go a long way in ensuring that you are dealing with a trustworthy person. That’s not to say that someone with bad credit isn’t trustworthy, they may have made a bad financial mistake when they were younger, but a bad credit score can be very difficult to rectify and last a lifetime.
A credit report can cost some money and varies depending on how much detail you require, taking partial payment using cash, credit, or debit cards is a quick way of gauging someone’s credit if you need a transaction to be completed quickly, but this should still be followed up with a report.
Billing and Explanation
Invoicing is at the core of a business’s operations and is designed to ensure that everyone involved in a transaction gets what they are owed, that is the customer gets a product and the retailer gets paid. But poor invoicing practices put everyone at risk including you as the seller of a service and the customer who might not be aware of where they stand.
As a seller, it is up to you to ensure that invoices are prepared and presented promptly, preferably as soon as a transaction takes place. Invoices should be handed to a customer and explained properly. Advice should also be given about the consequence of late payment.
It is also good practice to follow up on customers who miss a payment on the same day that the payment due is missed. Sometimes customers themselves aren’t aware that they have missed a payment so a proactive attitude is required on your part as well.